[TheTron88]

Hi, have an assignment on MYOB, and have a list of balance sheet adjustments that I have to enter. Really need some help in what accounts to exactly alter on the journal.

Here are the instructions and what my thoughts are on each one please let me know if I'm on the right track!
 
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A number of balance day adjustments are required a t 30th April 2008.  Please note – the company 
prepares financial statements each month meaning a ny adjustments you make must be for this one 
month period only. 
 
The following information is enough for you to det ermine whether an adjustment is required.  
Adjustments should be entered in MYOB using the “A ccounts – Record journal entry” function.  
Remember that you are required to record your work ings and journal entries and submit these with 
your completed assignment. 
  

4  A stock count is performed at 30th April 2008 by B ruce Richards and values are 
given to stock items by Jack Albie.  The value of  stock at this date is calculated as 
$11,234.    

Opening Stock of the month was $12,356 so I put this in the journal is this correct!
Dr. Inventory $1122
Cr. Opening Stock $1122

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5  April’s interest on the BNZ Term Loan at 6.5% per  annum is due for payment on 
1st May 2008. 

Do I have to enter this as its due next month or do I still have to pay for it this month. I worked out that 6.5% of the loan was 10,458 would this be the correct journal?
Dr. Interest Payable $10458
Cr. BNZ Bank Account

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6  Materials for a May job were ordered by Bruce Rich ards from Mico Wakefield on 
30th April and arrived later that day.  The invoic e however, didn’t come in until the 
5th May.  The goods were valued at $7,123. 

For this would I debit Materials and credit Accounts Payable? Or do nothing as the invoice doesn't come till next month, but will this make assets understated?


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7  Work started on a small job on 28th April.  The jo b wasn’t finished however until 
4th May with an invoice going out on 10th May.  Th e value of the work done to 30th 
April was $1,658. 

Dr. Accrued Revenue $1658
Cr. Construction Revenue $1658

Is that right?



Any help will be GREATLY appreciated. Thanks!

[morgaine300]

4 A stock count is performed at 30th April 2008 by Bruce Richards and values are
given to stock items by Jack Albie. The value of stock at this date is calculated as
$11,234.

Opening Stock of the month was $12,356 so i put this in the journal is this correct!
Dr. Inventory $1122
Cr. Opening Stock $1122

Is "stock" meant to be inventory items for re-sell, or like supplies on hand? Where I'm from we don't call it "stock" in accounting terms, so I don't know. Either way, this entry can't be correct. If this is inventory for re-sell you would have to have more information than this to even do the entry. Since all you have is the beginning balance, it looks like it could be periodic. Can you confirm that? If the value of the inventory is lower at month-end, you need to credit it. A debit to an asset increases the account. Also, the other side of that entry has to be some kind of account that can close to equity - I would call it Income Summary and you'd have some kind of equivalent. But I can't say anymore than that without knowing for sure what this is.

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5 April’s interest on the BNZ Term Loan at 6.5% per annum is due for payment on
1st May 2008.

Do I have to enter this as its due next month or do I still have to pay for it this month.

Neither. You aren't entering "due next month." You're entering what has accrued this month. The due date is irrelevant unless it falls within the accounting period. And since it's not due this month, you won't be paying it. And paying things has nothing to do with adjusting entries. If you paid something, it's already recorded and you don't adjust it.

I worked out that 6.5% of the loan was 10,458 would this be the correct journal?
Dr. Interest Payable $10458
Cr. BNZ Bank Account

That interest amount for one month means you've got an almost 2 million loan. Do remember it's only for one month. This and your last entry are making me think you do not know your normal balances. Payables are liabilities and credit accounts. If it's payable, it increases and you'd have to credit it. Debiting a liability means you're removing it. And you don't mess with the bank account. That's the principal on the loan and has nothing to do with interest. The point of accruing it is to expense the interest. An accrual is something that has been earned or incurred, but the money hasn't exchanged hands yet, which describes accrued interest. So you have an expense incurred.

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6 Materials for a May job were ordered by Bruce Richards from Mico Wakefield on
30th April and arrived later that day. The invoice however, didn’t come in until the
5th May. The goods were valued at $7,123.

For this would I debit Materials and credit Accounts Payable? Or do nothing as the invoice doesn't come till next month, but will this make assets understated?

First one is correct. The piece of paper is irrelevant to whether the event has occurred or not. You have the materials and have taken legal possession of them, so you have to record them.


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7 Work started on a small job on 28th April. The job wasn’t finished however until
4th May with an invoice going out on 10th May. The value of the work done to 30th
April was $1,658.

Dr. Accrued Revenue $1658
Cr. Construction Revenue $1658

Um, I'd stick it into Receivables, but that works if that's what you were taught to do, since Receivables is generally for accrued revenues. (It's actually receivable whether you've billed it or not.)

[morgaine300]

I just caught on that last entry the "construction revenue." It does sometimes help to know what the company does. That makes me question even more about what the "stock" is. You're calling the building materials Material, so that isn't it. And a construction company wouldn't likely have inventory for re-sale.

[TheTron88]

Hey thanks so much for your help. I have attached the set of requirements that we received, hopefully that will help with the inventory/stock question. Thanks so much again. I think for 7. you are right about using accounts receivables. And so for 6 ill debit materials credit accounts payable?

Thanks so much!! You've been a big help!

[morgaine300]

You're welcome. As for 6, yes.

As for 7, no that actually doesn't help, much. I got some info but I still don't know the answer. I'm going to assume it's an inventory of plumbing parts that are used in the construction. Meaning as it's used on a job, it would be charged off to some kind of cost account for the job. There isn't any list in the instructions of what expense accounts you have, so I don't know what that would be. But it's part of the cost of sales - look for something like that.

I don't know about the dollar amount. Notice the transaction on April 21 - where it says Julie did the reversing entry for inventory. I'm not aware of what kind of reversing entry would be made for that kind of account. That isn't any method I know. Reversing entries are generally done on accrued adjusting entries. Any adjusting entry on something like that should have put it to the correct ending balance from prior year-end. I don't see any reason to reverse that. So I have no idea what that is about, but it does tell me that the opening balance is not the proper beginning balance. And you also need to check if there were any additional purchases. Are materials and inventory the same? Because you have no materials account.